Thinking about making your rental homes greener and cheaper to heat? An air source heat pump is one of the clearest routes to a better energy rating, lower tenant bills and a property that is ready for tighter efficiency rules — and there is a £7,500 government grant to help with the cost. This guide explains how heat pumps work, what they cost to run, the grants available in 2026, and the practical points a landlord needs to weigh before installing one.
Last reviewed: 31 July 2026
Primary sources: GOV.UK, Ofgem and the Energy Saving Trust.
Key takeaways
- An air source heat pump moves heat from the outside air into your heating and hot water, typically delivering 3–4 units of heat per unit of electricity.
- The Boiler Upgrade Scheme (BUS) pays a £7,500 grant towards an air source heat pump in England and Wales, taken off your installer’s quote upfront.
- A heat pump can lift your EPC rating and help you meet the current and proposed Minimum Energy Efficiency Standards.
- Performance depends on good insulation and correctly sized radiators or underfloor heating — the building fabric matters as much as the pump.
- The old Renewable Heat Incentive is closed to new applicants; the BUS is now the main grant.
How an air source heat pump works
An air source heat pump works like a refrigerator in reverse. It absorbs heat from the outside air — even in freezing weather — and uses a compressor and refrigerant to raise that heat to a useful temperature for your radiators, underfloor heating and hot water. Because it moves existing heat rather than burning fuel to create it, it is highly efficient: for each unit of electricity it uses, a well-installed system produces around three to four units of heat. That efficiency is measured over a full year by the Seasonal Coefficient of Performance (SCoP) — the higher the SCoP, the lower the running cost.
Why landlords should consider one
The strongest reason is regulation. Privately rented homes in England and Wales must currently meet a minimum EPC of band E, and the government has set out plans to raise that minimum to band C, phased in towards 2030. A heat pump — paired with good insulation — is one of the most effective single measures for lifting a property’s rating and future-proofing it against that change. Alongside compliance, an efficient, low-carbon heating system reduces tenants’ bills, improves comfort, and adds to the appeal of the property for environmentally minded renters.
It is worth being realistic, though: a heat pump performs best in a reasonably well-insulated home with heat emitters sized for lower flow temperatures. In a draughty, poorly insulated property, running costs can disappoint. Treat the pump as part of a wider fabric-first upgrade rather than a drop-in boiler replacement.
Seals gaps around doors and windows to keep heat in.
Reflects heat back into the room from radiators on outside walls.
Cheap insulation that cuts heat loss from the hot water tank.
Grants and funding in 2026
The Boiler Upgrade Scheme (BUS)
The BUS, run by Ofgem in England and Wales, is the main grant. It pays £7,500 towards an air source heat pump (and the same for a ground source heat pump), replacing a fossil-fuel system such as a gas, oil or LPG boiler. The grant is applied by an MCS-certified installer and deducted from your quote upfront — it is not a payment you claim back later. The scheme has been extended to 2030, giving landlords a longer runway to plan upgrades.
For a limited period — from 21 July 2026 to 31 March 2027 — eligible off-gas-grid properties running on oil or LPG can qualify for an increased grant of £9,000 towards a heat pump. If you have a rural property on oil heating, that uplift is worth checking before it ends.
Other support
The Energy Company Obligation (ECO4) and the Great British Insulation Scheme continue to fund insulation and efficiency measures for eligible lower-rated homes, which can complement a heat pump by improving the fabric first. Some lenders also offer green mortgages or loans with preferential terms for energy-efficiency work. The older Renewable Heat Incentive is closed to new applicants and no longer relevant to new installations — treat any guide that still lists it as out of date.
Installation considerations
- Planning permission. Most domestic air source heat pumps fall under permitted development, but conditions apply — on siting, noise and proximity to boundaries — so confirm with your local planning authority, especially for flats, listed buildings or conservation areas.
- Sizing. A system that is too large or too small will run inefficiently. A competent installer will carry out a heat-loss calculation for the specific property rather than rule-of-thumb sizing.
- Emitters and insulation. Heat pumps run at lower flow temperatures than boilers, so larger radiators or underfloor heating and good insulation get the best performance.
- Use an MCS-certified installer. BUS eligibility depends on it, and MCS certification is a recognised mark of a properly designed and installed system.
Running costs and maintenance
Running cost comes down to the SCoP and the price of electricity relative to gas. A well-designed system in an insulated home is cheaper to run and lower-carbon than an old boiler; a poorly matched one may not be, which is why design matters. Maintenance is modest — an annual service by a qualified engineer plus keeping the outdoor unit clear of leaves and debris — but it should not be skipped, as it protects both efficiency and the manufacturer’s warranty.
How this fits the bigger picture
Government policy is steadily steering home heating away from fossil fuels — through tighter new-build standards, support for low-carbon systems, and the proposed rise in the minimum EPC for rented homes. A landlord who upgrades sensibly, fabric first and then a correctly sized heat pump, is well placed for whatever the final EPC deadline turns out to be, while offering tenants a warmer, cheaper-to-run home in the meantime. Check the current position on GOV.UK before committing, as scheme rules and efficiency deadlines continue to evolve.
FAQ
How much is the heat pump grant?
The Boiler Upgrade Scheme pays £7,500 towards an air source heat pump in England and Wales, deducted upfront from an MCS-certified installer’s quote. A temporary £9,000 grant applies to eligible off-gas-grid oil or LPG homes from 21 July 2026 to 31 March 2027.
Will a heat pump improve my EPC rating?
Usually yes, particularly when combined with good insulation. That helps meet the current minimum EPC of band E and the proposed rise to band C for privately rented homes.
Do I need planning permission?
Most domestic air source heat pumps are permitted development, but conditions on siting and noise apply, and flats, listed buildings and conservation areas may differ. Check with your local planning authority.
Is the Renewable Heat Incentive still available?
No. The Domestic Renewable Heat Incentive closed to new applicants in 2022. The Boiler Upgrade Scheme is now the main grant for new heat pump installations.
Are heat pumps cheaper to run than a gas boiler?
In a well-insulated home with a correctly sized system they can be, thanks to their high efficiency. In a poorly insulated property the saving is smaller, which is why insulation and proper design come first.
Sources for this article
- Apply for the Boiler Upgrade Scheme (GOV.UK)
- Boiler Upgrade Scheme explained (Energy Saving Trust)
- Domestic private rented property: minimum energy efficiency standard (GOV.UK)
